Court Orders That Employees May Pursue Their Wage Claims Collectively In Arbitration

On January 9, 2012, Chief Judge Michael J. Davis of the United States District Court of Minnesota ruled that a former employee who signed an arbitration agreement as a condition of employment could pursue his wage and hour claims as a collective action in arbitration.

Plaintiff Scott Mork, a former field application technician for Defendant Loram Maintenance of Way, filed a complaint asserting overtime violations under the Fair Labor Standards Act on behalf of himself and others similarly situated. Loram Maintenance of Way moved to compel arbitration arguing that Mork had to proceed on an individual basis in arbitration, rather than collectively with others. The court found that the broad language in the arbitration agreement affirmatively authorized arbitration on a collective basis, even though it did not specifically mention class or collective arbitration. In doing so, it clarified that the Supreme Court case Stolt-Nielsen, S.A. et al. v. AnimalFeeds International Corp. does not require parties to spell out their authorization of class and collective arbitration; rather, such an authorization may be implicit in the parties’ agreement.

The court explained the implications of adopting a rule foreclosing class and collective arbitrations in the absence of magic words referencing them in the agreement. It found that, in addition to promoting uncertainty, “the adoption of such a rule would likely prevent the vindication of workers’ basic rights under the FLSA.”

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